2025 INSC 1237

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Civil Appeal @ SLP(C) No. 19878/2022

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL No. …… OF 2025

(@ Special Leave to Appeal (C) no. 19878/2022)

MANORMA SINHA & ANR. …APPELLANT (S)

VERSUS

THE DIVISIONAL MANAGER, ORIENTAL INSURANCE

COMPANY LIMITED & ANR. …RESPONDENT (S)

J U D G M E N T

MANOJ MISRA, J.

1. Leave granted.

2. This appeal arises out of judgment and order of the High

Court of Judicature at Patna

1 dated 04.07.2022 passed

in Miscellaneous Appeal No. 804 of 2017, whereby the

compensation awarded by the XI

th Additional District

and Sessions Judge – cum - Motor Accident Claims

Tribunal, Muzaffarpur

2

in Claim Case No. 196 of 2011

was reduced from Rs. 88,20,454 to Rs. 38,15,499.

1

High Court

2

Tribunal

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Civil Appeal @ SLP(C) No. 19878/2022

3. As liability to pay compensation is not in issue, the

question that arises for our consideration is whether the

High Court was justified in reducing the compensation

payable to the appellant.

4. The operative part of the award passed by the Tribunal

including computation of compensation is found in

paragraphs 10 to 12 of the award, which are reproduced

below:

“10. Multiplier: So far quantum of compensation is

concerned, the proper multiplier will be 18 as per

Schedule-II of the M.V. Act, as the age of deceased

was 27 years as per evidence on record.

As per Ext. A & A/1 submitted by O.P. No. 2

Insurer (Insurance Company) and also Ext. 1

salary slip submitted by Claimant the salary of the

deceased for the month of Feb., 2011 was as under:

Basic Pay – Rs. 26,420/-

D.A.: 43% - Rs. 11,360/-

Local Allowance:

10% - Rs. 2,642/-

Other allowances:

49% i.e. Rs. 12,945.80

Thus, total salary of deceased comes to Rs.

53,367 per month. Therefore, loss of dependency

would come to Rs. 53,367 x 12 x 18 = Rs.

1,15,27,272/-

Out of which ½ his personal expenses would

be deducted and then loss of dependency would be

Rs. 57,63,636/-. In which 50% future prospects

would be added i.e. amount Rs. 28,81,818/- then

loss of dependency would be Rs. 86,45,454/-.

11. In addition, the claimants are entitled to get a

sum of Rs. 1,00,000/- under the head of loss of

estate, Rs. 1,00,000/- towards loss of love and

affection and Rs. 15,000/- as funeral expenses.

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Civil Appeal @ SLP(C) No. 19878/2022

Thus, total compensation will be Rs. 88,70,454/-

Hence, claimants are entitled to get Rs.

88,70,454/- with interest thereon at the rate of 6%

per annum.

12. Perusal of case record it is evident that

claimants have already received Rs. 50,000/- as

ad-interim compensation U/s. 140 M.V. Act.

Hence, this amount would be adjusted from the

amount of Rs. 88,70,454/-. Then it comes to Rs.

88,20,454/- as total compensation U/s. 166 M.V.

Act. Hence claimants are entitled to get the said

amount with interest thereon @ 6% per annum.

Therefore, it is,

ORDERED

That the O.P. No. 2 Oriental Insurance

Company Limited, Muzaffarpur is directed to pay

the total compensation amount of Rs. 88,20,454/-

to the claimants within two months with interest

thereon @ 6% per annum from the date of filing till

the date of realization failing which the law will take

its own course.”

5. On an appeal preferred by the Insurance Company (the

respondent herein), the High Court computed the

compensation in the following manner:

“In view of the above, the computation of the claim

of the appellant would be as follows:

1. Monthly basic salary Rs. 26,420/-

2. D.A. (43%) Rs. 11,360/-

3. Future prospect @ 40% Rs. 15,892/-

Rs. 52,892/-

4. Yearly income (52,892 x 12) Rs. 6,34,704/-

5. Less of 30% income tax -1,90,411/-

Rs. 4,44,293/-

6. Less of 50% personal expense - 2,22,146/-

(unmarried) Rs. 2,22,147

7. Multiplier (17 x 2,22147) Rs. 37,76,499/-

8. Conventional head (unmarried) + 39,000

(30,000 + 3,000 each in 2014,

2017 and 2020) Rs. 38,15,499/-

The aforesaid total amount of Rs. 38,15,499/- shall

be paid by the Insurance Company to the

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Civil Appeal @ SLP(C) No. 19878/2022

respondent/claimants within a period of three

months with interest thereon at the rate of 6% per

annum from the date of petition till the date of

realization.”

6. The difference between the order of the Tribunal and

that of the High Court as regards the mode of

computation of compensation is clear. The High Court

while computing the compensation has, inter alia,

excluded the allowances payable as per the last pay slip

and gave future prospects at the rate of 40% in place of

50% as was given by the Tribunal. Besides above, the

High Court made a flat deduction of 30% towards

income tax.

7. We have heard the learned counsel for the parties and

have perused the materials on record.

8. The submission of the learned counsel for the appellant

is that the High Court has erred in not including the

allowances payable for computing the compensation

and has also erred in reducing the income by a flat rate

of 30% deductible towards income tax even though it

might not be even leviable. It is submitted that if any

deduction towards income tax is to be made it cannot be

at a rate different from the rate at which the tax is

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Civil Appeal @ SLP(C) No. 19878/2022

payable on the annualized income based on the last pay

slip. It has been submitted that the income tax slab

prevailing in 2011 were: annual income up to Rs.1.60

lacs – Nil; annual income between Rs.1.60 lacs to Rs.5

lacs – 10%; annual income between Rs.5 lacs and Rs. 8

lacs – 20%; and annual income above Rs.8 lacs - 30%.

9. Per contra, the learned counsel for the respondent

submitted that though the tax payable may vary but the

allowances must be excluded in computation of salary

in view of decision of this Court in the case of Gestetner

Duplicators (Pvt.) Ltd. v. Commissioner of Income

Tax, West Bengal

3. Further, while computing

compensation deduction towards income tax is to be

made as held by this Court in Ranjana Prakash &

others v. Divisional Manager & another

4.

10. We have given due consideration to the rival

submissions.

11. Before we proceed to determine the just compensation

payable in the context of submissions made before us, it

would be useful to mention that there is no dispute in

3

(1979) 2 SCC 354

4

(2011) 14 SCC 639

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Civil Appeal @ SLP(C) No. 19878/2022

respect of the age of the deceased at the time of accident,

which, as per finding returned by the Tribunal, not

disturbed by the High Court, was 27 years. Therefore,

multiplier of 17, which has been adopted by the High

Court is correct.

5

12. Now, the next question is whether allowances are to be

added to the salary for determining the multiplicand. In

National Insurance Co. Ltd. v. Indira Srivastava &

Ors.

6 it was held that “the term income has different

connotations for different purposes. A court of law, having

regard to the change in societal conditions consider the

question not only having regard to pay packet the

employee carries home at the end of the month but also

other perks which are beneficial to the members of the

entire family”. In Vijay Kumar Rastogi v. Uttar

Pradesh State Roadways Transport Corporation

7 a

three-Judge Bench of this court noticing earlier

decisions on the point observed that “the income should

include those benefits, either in terms of money or

5

See: Sarla Verma & Ors. v. Delhi Transport Corporation & Ors., (2009) 6 SCC 121, paragraph 42, affirmed in

National Insurance Company Limited v. Pranay Sethi & Ors., (2017) 16 SCC 680, paragraph 59.6.

6

(2008) 2 SCC 763, paragraph 9

7

2018 SCC OnLine SC 193 paragraph 11

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Civil Appeal @ SLP(C) No. 19878/2022

otherwise, which are taken into consideration for the

purpose of payment of income tax or professional tax,

although some elements thereof may not be taxable due

to exemption conferred thereupon under the statute.”

Following the decision in Vijay Kumar Rastogi (supra)

in National Insurance Company Ltd. v. Nalini &

Ors.

8 it was held by this Court that the emoluments and

the benefits accruing to the deceased under various

heads for the purposes of computation of loss of income,

ought to be included irrespective of whether they are

taxable or not. Thus, in our view, the High Court erred

in excluding the allowances from the computation to

arrive at the multiplicand. Hence, the total monthly

income was rightly computed by the Tribunal at

Rs.53,367.

13. As regards deduction towards income tax is concerned,

same is permissible in view of the decision of this Court

in Ranjana Prakash

9 (supra). However, in our view,

deduction towards income tax should be at such rate

which the annual income may be subjected to in the

8

2024 SCC OnLine SC 2252

9

See Paragraph 9 of the judgment in Ranjana Prakash referred to in Footnote 4

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Civil Appeal @ SLP(C) No. 19878/2022

relevant year. It is not demonstrated that the allowances

received were exempt from income tax. Even the nature

of allowances has not been disclosed to enable us to

determine whether they are exempt from tax. Therefore,

we include them in the annual income and compute the

annual income as Rs. 6,40,400 (approximately) for the

purposes of tax. The tax payable in the relevant year

(i.e., with reference to the date of death) would be

Rs.62,080 (Tax: Nil up to Rs. 1.60 lacs; Rs.34,000 @ 10%

up to Rs.5.00 lacs; and Rs.28,080 @ 20% up to

Rs.6,40,400). Thus, net annual income from salary after

deduction of income tax, with the allowances, would be

Rs.5,78,324.

14. In so far as addition for future prospects is concerned,

High Court gave @ of 40% of actual income whereas

Tribunal gave @ of 50%. The deceased was an Engineer

employed with Power Grid Corporation of India, which is

a public sector undertaking. There is no material to

indicate that his job was not permanent in nature or that

he was on a contract for a limited period. In such

circumstances, in our view, addition for future prospects

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Civil Appeal @ SLP(C) No. 19878/2022

would have to be at the rate of 50% considering that

deceased was aged below 40 years at the time of

accident.

10 Therefore, the High Court was not justified

in adding future prospects at the rate of 40% in place of

50% as awarded by the Tribunal.

15. In view the discussion above, after deducting 50%

towards personal expenses, 50% of annual net salary

would be Rs.2,89,162. 50% of it for future prospects

would be Rs.1,44,581. Thus, net annual income post

deduction towards personal expenses and addition for

future prospects would be Rs.4,33,743. Consequently,

the multiplicand for determining loss of dependency

would be Rs.4,33,743. As we have found that multiplier

would be 17, the loss of dependency would be 4,33,743

X 17 = Rs.73,73,631. Compensation payable under

conventional heads such as loss of filial consortium, loss

of estate and funeral expenses can be taken at the rate

specified in Pranay Sethi (supra)

11 as the accident is of

the year 2011. Hence, we deem it appropriate to add

Rs.15,000 towards loss of estate, Rs.40,000 towards

10

See paragraph 59.3 of the judgment in Pranay Sethi (see footnote 5)

11

See: Paragraph 59.8 of Pranay Sethi decision referred to in Footnote No.5

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Civil Appeal @ SLP(C) No. 19878/2022

loss of filial consortium and Rs.15,000 towards funeral

expenses to Rs.73,73,631 to determine total

compensation payable as Rs.74,43,631.

16. We, therefore, allow the appeal, modify the order of the

High Court by enhancing the compensation payable to

the appellants to Rs.74,43,631 with a direction that the

aforesaid compensation shall carry interest @ six

percent per annum from the date of the claim petition

till the date of actual payment.

….............................................J.

(Pamidighantam Sri Narasimha)

................................................J.

(Manoj Misra)

New Delhi;

October 15, 2025